Merit Circle
All views are my own. This is not financial advice.
Thesis
I believe blockchain gaming cryptos will become the first scalable major use case for crypto. Merit Circle is at the center of it.
For some context, crypto gaming is giving people new means of income. Games like Axie Infinity set fire to this trend.
Axie Infinity is a pokemon style web based game where users can buy pokemon type characters and then breed and battle them. The game is built around peer to peer interaction and value exchange. Unlike the traditional gaming model where a company like Epic games will look to extract value out of its users, Axie Infinity allows users to exchange value amongst themselves. For a practical explanation of what this means, consider the video game Fortnite. In Fortnite you buy in-game items like skins. Once a user does not want the game anymore, the value is retained by the game developers and the user doesn’t get any additional utility out of the gaming skin, nor do they get their money back.
This is changing.
Games like Axie Infinity allow users to take their characters and sell them to other users when they are finished with them. All users need multiple Axies (game characters) to get started in the game. In order to get involved, users must buy an Axie character from another user. This has allowed an in-game economy to develop. Users can “breed” characters to create new characters, as well as exchange value with other users through gameplay. Some skilled users during market peaks (when the in-game token is most valuable) have made $50k+ in a week. The game has in-game mechanics that manage supply and demand of Axie characters so that the economy has some sustainability.
Many players are coming from parts of the world where their economy does not reward them properly for their time. Users in places like the Philippines are able to potentially make more money in a week playing Axie Infinity and other new blockchain games than a typical 9-5 job.
This proof of concept Axie Infinity has shown has ignited a fire in blockchain gaming. Indie game developers are scrambling to create new games that replicate and iterate on the Axie Infinity model. The Axie Infinity token (AXS) 1 year ago was $0.50 cents. Today it is $101.65. During the peak of the bull market, in October, it was $162.98.
Hopefully this illustrates the power of crypto gaming. I believe in the next few years we will see many other companies like Axie Infinity that push the space forward and offer robust in-game economies for new players to make sustainable income. This will give the idea of “professional gamer” a whole new meaning.
Please note that even though there will be companies like Axie Infinity looking to do good and push the space forward, there will also be many scams and failure companies that enter the space.
The Opportunity
Merit Circle, in my opinion, sits in the best position to take advantage of crypto gaming.
Merit Circle is a DAO.
A DAO is a decentralized autonomous organization.
A decentralized autonomous organization is an entity with no central leadership. Decisions get made from the bottom-up, governed by a community organized around a specific set of rules enforced on a blockchain.
DAOs are internet-native organizations, collectively owned and managed by their members. They have built-in treasuries that are only accessible with the approval of their members.
Decisions are made via proposals the group votes on during a specified period.
A DAO works without hierarchical management and can have a large number of purposes. Freelancer networks where contracts pool their funds to pay for software subscriptions, charitable organizations where members approve donations and venture capital firms owned by a group are all possible with these organizations.
After the word gets out that players are profitably playing video games like Axie Infinity the price of their Axie characters go up in value. The demand increases and there is not an increase in supply. This has happened with Axie Infinity and multiple other new blockchain games.
Even though a game like Axie may be profitable for a player, the cost to buy a character may be too cost prohibitive and deter them from playing.
This is where Merit Circle comes in.
Merit Circle purchases in-game characters and assets from new and existing blockchain games with money syndicated from their DAO. Prospective new games are voted on in the form of proposals by token holders. Sub-DAOs are created for each game and assets are delegated to players in the form of scholarships.
To simplify this, a prospective player that cannot afford buying into the game can apply for a scholarship from the Merit Circle DAO. If selected, that player will be lent the in-game asset and be able to play the game with Merit Circle’s asset. The player will keep a portion of the rewards for themself and pay the remainder back to the DAO. Some players will be profitable, others will not. Just like any other business, the thought it that the great players will pay for the unsuccessful players and the DAOs success will mostly ride on the extremely successful players that come into the scholarship program.
I believe this opportunity is great because it’s a real business. As a token holder you are a part owner and member of the DAO.
There are numerous competitors forming that are similar to Merit Circle. Yield Guild Games is the main competitor at this point. Merit Circle and Yield Guild Games have partnered on multiple projects so it seems they are approaching this as a collaborative opportunity rather than a zero sum game. I think this could be extremely powerful as they’re looking to help all boats rise as opposed to breaking each other down. They’re looking to grow the market, not strangle it. I am looking into spreading my allocation between Merit Circle and Yield Guild Games while on the current market pullback.
I think both of these are long term plays.
In order to buy into Merit Circle buyers will need to use an Ethereum based decentralized exchange, like Uniswap. The contract address for swapping can be found on coinmarketcap.com.
Staking
FYI, there is a staking opportunity on Merit Circle’s website. Staker’s can get 217% APR by staking for 52 weeks. Alternatively, staker’s can get 108% APR by staking for one year (with the option to remove their tokens before the period expires).
What do you think? Do you like Merit Circle?
lildoge